State Distribution Laws

License Needed to Self-Distribute: Yes
Statute: 235 ILCS 5/5-1; 235 ILCS 5/3-12

Illinois Statute

Brewers in Illinois that produce less than 930,000 gallons (30,000 barrels) of beer per year can apply for a class 1 brewer’s license, which permits them to self-distribute their beer to retailers. A class 1 brewer will also lose its license to distribute if it (or an entity associated with it) produces more than 25,000 gallons of wine or 50,000 gallons of spirits per year.

Illinois also regulates the relationship between brewers and their wholesalers. Brewers and wholesalers are both prevented from terminating or not renewing a distribution agreement without good cause and without first attempting to resolve the disagreement. They must also provide 90 days’ notice and state the party’s intent to terminate/not renew the agreement, the reasons why, and the date when it will take effect. Brewers specifically are able to immediately terminate a distribution agreement without notice when:

• the wholesaler fails to pay
• the wholesaler assigns its assets to a creditor
• the wholesaler becomes insolvent
• the wholesaler dissolves its business entity
• the wholesaler violates any law that adversely affects its ability to sell beer, or its license is revoked
• the wholesaler engages in fraudulent conduct
• the wholesaler attempts to transfer the business without the brewer’s approval

Brewers who terminate their distribution agreements must pay the terminated wholesaler reasonable compensations for the fair market value of the wholesaler’s business. Brewers are also prevented from:

• requiring wholesalers to agree to unreasonable terms in the distribution agreement
• fixing the resale price for wholesalers
• not providing a wholesaler with a written distribution agreement
• requiring a wholesaler to accept or purchase one product as a condition of purchasing another
• requiring the wholesaler to terminate or hire a new manager without good cause
• terminating an agreement because the wholesaler will not purchase signs or advertising materials
• requiring arbitration in their distribution agreements
• unreasonably withholding or delaying their approval to a transfer of the wholesaler’s business or stock
• restricting free association among wholesalers

Fun Fact: The beer we know today as Miller Lite has its roots in Chicago, where it was originally brewed and known as Meister Bräu before the recipe was purchased (and somewhat altered) by Miller in the 1970’s.